Deutsche Bank has started US mortgage settlement talks

LONDON: Deutsche Bank AG is nearing an agreement with the US Department of Justice (DoJ) to settle a long-running investigation into its mortgage-backed securities business.

The bank is in talks “concerning a potential settlement of claims that the DoJ may consider bringing, based on its investigation of Deutsche Bank’s residential mortgage-backed securities origination and securitisation activities,” the firm said yesterday in its second-quarter earnings report.

Germany’s biggest bank has paid more than US$9bil in fines and legal settlements worldwide since the start of 2008, according to data compiled by Bloomberg. That includes settlements related to violations of US sanctions, rigging of interest-rate benchmarks and allegations that it defrauded US-backed mortgage issuers Fannie Mae and Freddie Mac.

US authorities have already extracted more than US$44bil in fines from other banks for their role in creating and selling subprime mortgage bonds that helped spur the 2008 financial crisis. Goldman Sachs Group Inc said in April it will pay US$5.1bil to resolve US allegations that it failed to properly vet mortgage-backed securities before selling them to investors as high-quality debt. – Bloomberg